Daily Catch

Work requirements dramatically boost earnings of Medicaid recipients

With Janet Mills poised to take control of the Blaine House in just a few weeks and strong Democratic majorities in the legislature backing up her policy agenda, there is little doubt that the swift implementation of Medicaid expansion — however ill-advised — will be a top priority for her administration. She said as much after her victory.

But if Mills truly wants what’s best for Maine’s neediest citizens, she would do well to adopt — with federal approval — work requirements for newly-eligible, non-disabled, working-age adults.

Medicaid work requirements are often couched in terms of making sure those who receive government assistance are doing their best to help themselves. By increasing labor force participation, work requirements also help businesses fill job openings and increase overall output. Requiring recipients to work a few days a week at a job, volunteering, or pursuing higher education doesn’t seem unreasonable, and a Politico/Harvard University poll in 2017 found that 72 percent of Americans agree.

But work requirements also benefit Medicaid recipients themselves, according to new research by the Buckeye Institute, by boosting their long-term earnings and giving them a better chance of achieving self-sufficiency.

Somewhat surprisingly, the authors found that Medicaid work requirements “raise the hours worked per week by 22 hours for women (from 12 hours to 34 hours per week), and by 25 hours for men (from 13 hours to 38 hours per week), bringing Medicaid recipients well above the typical 20 hours per week requirement.”

Why do Medicaid recipients work far more hours than the minimum required to retain their benefits? Because as individuals work more, they gain experience, which translates into higher wages and even more hours worked, leading up to full-time employment and, hopefully, self-sufficiency. “With single, able-bodied individuals with no dependents on Medicaid averaging approximately 11 hours of work per week, the 22- to 25-hour increase in work hours confirms that individuals would tend towards full-time work if required to work at least 20 hours per week,” the authors write.

Those extra working hours are reflected in substantial increases in lifetime earnings. The study concludes that, even assuming a person remains on Medicaid for their entire life, work requirements increase lifetime earnings by $212,694 for women and $323,539 for men. For people who completely transition off of Medicaid after work requirements are implemented, they earn almost $1 million more over the course of their working years. As a point of comparison, a $1 million difference in lifetime earnings is roughly the difference — for both men and women — between high school graduates and those with graduate degrees.

The best antidote to poverty is a job. The Buckeye Institute’s work mirrors existing research that shows that work requirements in welfare programs have led large numbers of able-bodied adults to enter the labor force and, on average, doubled their income. It’s a win-win.

About Liam Sigaud

Liam Sigaud is a former policy analyst at The Maine Heritage Policy Center. A native of Rockland, Maine, he holds a B.A. in Biology from the University of Maine at Augusta and has studied policy analysis and economics at the Muskie School of Public Service at the University of Southern Maine. He can be reached by email at liam.sigaud@maine.edu.